Vodafone slams Ofcom's 'exit without penalty' proposal

Allowing consumers to leave their contract without penalty will damage the market, says operator

UK mobile operator Vodafone has struck out at Ofcom's proposal to allow consumers to exit their landline, broadband or mobile contract without penalty if their provider introduces any price increase during the term of the contract.

According to Vodafone, the regulator's proposal risks generating “significant confusion” and could potentially result in the cost of contracts increasing, thereby damaging the market.

“We believe there is work to be done to ensure that customers understand the need for long-term contracts and to ensure they are protected during that time, but Ofcom first needs to understand the difference between the prices that are set by mobile phone companies and those which are not,” Vodafone said in a statement.

“We simply do not control many of the charges faced by consumers. They are set by third parties and mobile phone companies have to pass those costs on or they will be subsidising other companies.”

Vodafone said that mobile operators could not be held accountable should BT, for example, put up the price of directory enquiry services, premium rate and 08 calls to premium rate, nor could it be expected to swallow the price rise itself.

Under Ofcom's proposals, new customers could find themselves paying different prices for different services, depending on which third party has recently increased its prices, said Vodafone.

“At a time when both the regulator and consumer groups are calling for prices to be simpler to understand, Ofcom's proposals could take the industry back to a time when consumers were faced with a bewildering array of prices for calling different numbers,” the company said.

“We will of course be engaging with Ofcom to see how they intend to prevent price gouging by third parties, widespread consumer confusion about prices and increases in the up-front cost of getting a phone.”

While the “exit without penalty” rule is Ofcom's preferred solution, the consultation also considers several other possible approaches to address price rises in fixed term contracts.

The regulator is now inviting stakeholders to offer views on all the options put forward for consultation. The consultation closes on 14 March 2013 and Ofcom expects to publish a decision in June 2013.